Decree 854 of August 3, 2021
Criteria of the dissolution event for not complying with the going concern hypothesis
The Ministry of Commerce, Industry and Tourism (the “Ministry”) enacted Decree 854 of August 3, 2021 (the “Decree”) by means of which “dictates financial reasons or criteria to establish equity deterioration and bankruptcy risks and other matters”.
The Decree establishes, among other things, the following:
- The dissolution event for not complying with the going concern hypothesis (the “GNH”) must be verified by the managers at the moment of drafting the year end general purpose financial statements. Therefore, if the financial statements are drafted considering that it does not comply with the GNH, it must be submitted al the information to the highest corporate body in the ordinary meeting for the corresponding decisions to be taken.
- The managers must be continuously monitoring the financial statements and when identifying an equity deterioration and bankruptcy risk must immediately informed the highest corporate body for the corresponding decisions to be taken.
- The managers must establish the existence of equity deterioration and bankruptcy risk pursuant to the financial reasons according to their business model and sector in which the corporate purpose is developed. Notwithstanding the aforementioned, the following criteria should be use as reference:
| Indicador | Dimensión | Fórmula |
| Posición patrimonial negativa | Detrimento Patrimonial | Patrimonio total < COP$0 |
| Pérdidas consecutivas en dos periodos de cierre o varios periodos mensuales según el modelo de negocio | Detrimento Patrimonial | (Resultado de ejercicio < 0) y (Resultado del ejercicio anterior < 0) |
| Capital trabajo neto sobre deudas a corto plazo (<0,5) | Riesgo de Insolvencia | (Cuentas comerciales por cobrar clientes + inventario corriente – Cuentas comerciales por pagar) / Pasivo Corriente |
| UAII / Activo total < Pasivo | Riesgo de Insolvencia | (Utilidades antes de intereses e impuestos / Activos Totales) < Pasivo Total |
In the following link you will find the Concept 220-118627 of july 23rd of 2020.
Author: Raúl Vargas I [email protected] I Corporate Law
